HOW HARD MONEY LOANS WORK
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- Опубліковано 17 сер 2020
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ABOUT BRIDGER PENNINGTON
Bridger Pennington is the founder of 2 investment funds that have done over 217 deals in the last 4 years. Additionally, he currently manages an 8 figure hedge fund Ugly Unicorn and is a strategic advisor to 8 portfolio funds.
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You couldn't have explained it any simpler, really appreciate the content bro. You're going to be a top finance UA-camr in no time!
Thanks Richard, that means a lot man👊
@@bridger_pennington so what what’s consider worth it for hard money lenders like what do you guys look for as worth it in returns? Do they loan to people who plan on spending no more than $120k on a property and renovations? What depicts the returns that the lenders want
Very well explained!! Thank you so much
Great video! Amazing content, thank you and keep it up please!
Thanks for explaining this dude that was really informative ! Going to check out the rest of your content p
Awesome, thank you!
No time is right, like never
Excellent presentation!
Thanks for answering this topic.
great articulation!!!
Thank you so much !
You sir, you are a hero!
Phenomenal explanation thank you
Like the required down for the loan you would provide? Very informative video.
Hi Bridger,
Keep up the good work, with time you'll get to a big audience with your highly valuable content.
An idea for a video, that I would love to watch and learn, is how to manage the day to day of a fund. The people structure, software you use, etc.
Cheers and congrats for great work
Thanks for the idea!
will appreciate that too, want to start a fund
Very straightforward and easy to digest! Thank you
Perfect explanation…
Great video. Tx
But how much will gap investors interest be? Thank you for the video
Great work. Thanks
Thank you too!
Thank you
Great content!
Thank you!
Thanks bro
Can your do this example on a fix and flip? I just like the way you explain it.
You also have to include the commission you pay the realtor to sell your home and closing costs.
And I don’t think it’s 80k it’s 30k or less . Because out of the 80k - 50k (rehab costs)= 30K
@@tonyrosab2266 still not bad profit wym
Why investors buy off market
Seller side typically pays
What lender is giving 100% of purchase price?
What do you use to track payments from borrowers? so far I'm using excel sheets but wondering if there is an easier platform to make sure all money came in on a monthly basis
This was very informative. Quick Question if you are needing the LOC do you just tell the Lender and is it a qualification process for the LOC for the Rehab?
I am a commercial lender with Lend Base we offer asset based loans to help you free up your collateral we do everything under the sun. Fix & flips, land loans, farm loans, DSCR loans, equipment loans, bridge loans ,Hard-money anything that you need. This was one of the best explanations of a hard money loan that I have heard! Keep up the good work. 😊
...and I want you to do a video showcasing your operations!
So from what I’m understanding it’s not good to use hard money loans for rental properties, because you can’t get that full amount back within that time zone?
If that’s the case, but need a fast loan, what about getting a hard money loan to go ahead and get it moving, then going to a bank for a loan to pay that hard lender back in time and pay the bank out over time?
How can I get out of a hard money loan with bad credit
thanks
Perfect.
Great video, only problem I see is that you have in the example AUCTION property, please let me know which hard money lenders give loans for AUCTIONS and I will be first in line to get a deal done. My experience is that no hard money lender gives money for AUCTIONS. Please clarify
good vid
Great content. Thank you for breaking it down in extremely simple terms.
Asides the paperwork and terms being on point. Since this is your personal money, are you still claiming short term capital gains. Dealing with taxes, even though your not running your hard money lending as an llc business. Or are you? Thx
I'm thinking about using a hard money loan to buy a Fixer upper single family home. I'm currently living in a duplex I bought. If I buy a single family home, fix up the home, and then refinance, would they look at the debt from the hard money loan when calculating my DTI?
Is a LOC the only option for the renovations, or can the renos be rolled in to the hard money loan itself?
Can you do a video on how to start a bank and investment bank
This was so helpful and the video isn’t even finished playing
Wow. Good job. Can I invest the money I have in my TFSA in private lending business. Do I need to incorporate the company? How will the profit be taxed? Do I need to have a trustee, like Olympia trust or computer share to transfer my funds from TFSA account to the private lending business account? Thank you.
What if you own the home free and clear. Is there a minimum to do a total reno?
Would you recommend this kind of loan to buy and hold a multi unit?
Where are the investors to buy into partnership for properties that earn monthly income? I have not seen any videos or website that network people towards this subject when persons have a property that needs investors to bring cash $$ towards getting the build out complete to then be able rent out..
Watching from Pakistan for Hard money investing company. A digital marketer agency owner who's running Ads for them. You couldn't have explained it better dude!
What's the name of the same Hard money investing company?
Hi I would like to ask how did you get the 5.5% from the video could you provide some formula? Thank you! I really have trouble understanding it.
11% annualized is 11% over 12 months. If the loan is for 6 months it is one half of the 11%, or 5.5%.
im confused on where the 50k would be coming from. would it make sense to apply for a grants/loan for that 50k?
Overall, really good info. But I do need to correct one of your statements. The name Hard Money has nothing to do with it being expensive. It’s called Hard Money because the loan is against a Hard (physical) Asset. Hard Money lenders are asset based first and foremost. Yes, most check credit to make sure that the individual is a good risk, but the hard asset is the most important thing in the loan. The reason that Hard Money is expensive because it’s a considerably more risky loan than a traditional loan that a bank will do (most banks won’t lend on properties that need renovations/rehab - yes I know that some will). Most hard money loans are against property that needs work. The reason it’s riskier is because as soon as the demo starts, the house becomes worth less. It’s not worth what the loan is based on until the renovations are complete.
One other thing, you really should have gone into why Hard Money lenders typically stop at either 65% or 70% of ARV for their loans. Your example of the $800K loan on a $1M property is never going to happen with a professional Hard Money lender. An 80% LTV is to risky in asset based lending.
Good points. The clarification you made are in line with what I have heard as well (still a good video I think). Question for you, which valuation figure do most hard money lenders use, LTV or ARV (After Renovated Value?)?
@@wannabedal-adx458 both are important. Ltv is typically based off of arv (most hml's require appraisals to determine arv).
I bought a condo as investment with hard money loan.. I am thinking to refinance with other banks for lower interest rate.. any suggestioN..?
how do i find the cheap houses
Great video
How did you get the 5.5% again?
11% is the annualized rate, since his example is for 6 months you divide the 11%(12months) by 2 and you get the 5.5%
I'm actually looking into becoming an investor in hard money loans, it seems like good option to diversify one's portfolio.
It's a great way to make money and diversify. All of our funding tgat we do comes from private investors.
How did it go ?
Will this strategy work with buy and hold?
How often do landers just steel the information on the on the profitable deal and do it themselves or just give their flipper partners? How can flipper protect in such cases?
So Thank you for your information. I was wondering if you wouldn't mind answering two questions. Could a hard money lender take possession of my property other than if I were to default on payment? And why would lender ask me to put him on my home owners ins? REALLY APPRECIATE your help.....I'm getting cold feet about the deal.....
How did your deal go? Looking to venture into hard money loan but I have been doing a ton of research first.
Thanks much sir . I understood you very well . As a new investor, haven’t flipped anything would it be wise to work with one property?
Yes, I would just start with one syndication deal you can learn more about them here ua-cam.com/video/ounSrSkPJQY/v-deo.html
Great video Bridge
Glad you enjoyed it
how to get proof of money from hard money lender to buy Hud home
Perfect way at explaining it. The only thing i didnt understand was the 11% thing were you converted it to 5.5%. can anyone help me understand please?
So how about buying a 100k home needing complete rehab and needing a 60k repair and realtor saying it will sell for 240-260k about how much real profit can I make with a hard money loan
So for a 300k house how much would you charge ?
it sounds that they are doing a 100% LTP (loan to price) but not a 100% LTV as the value is 350k? and therefore 71%% LTV?
Where did the 50k come from?
Good video, very informative and on point. In the current rate environment we are in a HML is not that much more expensive now than a conventional primary residence mortgage and cheaper than a SBA loan
Do you find that most hard money lenders charge a fixed percentage regardless of the loan term, or are most of them wanting a percentage annualized?
can a hard money loan also include refinance cost
I'm trying to do a hard money loan in central FL. How can I contact you?
3:04 where tf did you get the 400k selling figure?? Wouldn’t you get an appraisal before coming up with a random number to sell?
Just watched the video was awesome but after the math is done wouldn’t the profit be 30,000 as you would’ve recover the 50,000 you put in for upgrades? Or am I missing something ,but either way it seems like a great way to make money. Thank you bro for the information
Line of credit would've be added to the amount of loan when its matured so 250k+interest+50k from line of credit. Im not very sure if this 100% correct but so far i perceived it like this. Hope it helps😀
The $50k was already included on the original number, when he talks about the remaining $100k "Profit", he already added that on the original $250k loan. The only remaining amount to deduct after that would be the $7,500 & the loan interest (which he shows as a $20k total cost). This leaves a remaining profit of $80k.
Can a hard money loan be longer than a year. Say 3 or 5yrs at the most? I have an idea but it wont work if it's only a year loan. Ill need 3yr at least.
Do you have to have amount of reserves required plus the borrower funds in your bank at the time of closing ?
I am currently on the process of closing my first property. The lender required me to have 6months of payments in the bank account.
With what company?
What about if it is a pie and hold property? How does it work when you pay back the hard money lender?
Buy and hold lol
You didn't mention real estate agent fee's and closing cost deduction from the 80 grand
Can I borrow money to get a house out of debt and then turn around and sell it?
I need a sample contract so I can start lending.
Some cover the renovation cost roo
You didn't subtract realtor fees when you sell.
Actually he's assuming you are making the deal off market
What about commercial 1.3M for a profitable running business .
Does the hard money lender pay the realtor fees?
This was awesome.
I just want to add that 80k profit - 50k put for rehab.
Would leave a profit of 30k. Correct?
What happens to the closing cost expenses? 🤔
i think you make your 50k back from the sale of the property. from the 400k, 250k back to hard lender and 50k rehab back to you. 100k left over before loan payment.
So he explained it as you make $100,000 after paying the $250,000 back and paying yourself the $50,000 back. Then you have to pay the interest on the loan is $13,750 but yes he did forget to mention the closing costs but if you look back at it he said "about $80,000 is profit" because he was adding in the closing cost but he never mentioned it.
Profit of 80k but you forget about agent commission and capital gain tax. 80k turns to 40k real quick.
ARV..After "Repair" Value...broski.
...and transfer of funds always happens at Title. No chance of skipping out to the Bahamas 😆
But how does the process work? Do hard money lenders need tax info or just require credit score only?
No they dont, they want to know the home is a good deal, they dont care about the other stuff, make sure the deal is good and youll get the money
They don't thats why the charge alot more interest than bank to cover the risks. They just wanna know whats the money for and isit reasonable.
If your score is below 650-620, they will not lend to you. They will ask you to get a partner. Especially if this is your first flip. They also want you to put a downpayment on the loan.
Is there anyway to do this type of video on a fix and flip properties because I am about to get into that business and you explain things so well !
No promises, but I'll add it to my list!
Meanwhile, I'm a Bahamian trying to learn this.
I need some funds to buy a house
Do you lend in California?
Yes, I have before!
I figured it out in my head! hehe approx $$$
Wait I’m lost…..What if you’re not trying to flip the house but instead trying to rent it out? When will I have to return the money? Especially if I’m in it for longevity?
Great question - you can always refinance out of the hard money into a loan amortized over say 30 years or so. Keep in mind, you must meet the credit requirements for refinancing (which are always going to be higher than fixing and flipping).
What protects the buyer from the lender giving away the deal to one of their buddy
I'm looking for a 25000 loan on a property that is in South America. I believe it would be a great Airbnb investment. Does anyone know the best route to obtain a loan without going through conventional financing?
What happens if you're not able to to sell it for a loss. You still owe hard money lenders? Will it go on your credit?
Yes if you don’t end up selling you will have to refi with a bank because more than likely hard money lenders are balloon payments which means it has to be paid in full in 12 months. So you would refi with a bank to give you more time to sell.
I'm a new hard money lender. I've closed three deals and am looking for more property flippers. My problem is that people don't know I'm here and I only want to work locally. I want to be able to drive by the properties without it being a big deal to me. My question, how do I find more people looking for money?
where are you located?
@@fritzthedragon MA
Круто, только говорил бы помедленее, на 0,5 скорости смотрю🤣
Did you forget to deduct Commisions and Clossing costs?
It’s hard for my own put i forgot all my English and math i don’t go to collage
Can you do a video of getting a hard money loan against the equity in your home with no income verification and bad credit score
keep an eye out👀
Just get a HELOC bro
@@georgedelobos9755 thanks yeah ima look into it
I looked into it basically same problem as a refi my credit is bad right now because of my high credit utilization I need a loan just based off my equity only but I guess there's nothing really out there
He didn’t make 80% profit when he put up his own $50,000 for rehab more like $30,000 profit
Wait, didn't the investor make 30k in that deal? Not 80k. 50k was used for rehab of his own money
Yes. That's what I was waiting for him to say.
50k rehab was added to the 250k
The property sold for 400 minus the fees
Which you walk away with 380k the 80k profit
If get a 6 month term hard money loan, but i finish the renovation in 4 months, do i have to pay 6 months of interest??
Wouldnt you only make 30k from this deal in reality? Because you went in with 50k for reno made 100k from the deal minus the 13,750 at the end?
Why wouldn’t a house flipper just get a loan from a bank for lower interest rates?
What if property does not sell within 6 months, I am pretty sure there is a big fee or penalty the investor will have to absorb.
No you will want to refi with a regular bank to pay that back.
What about closing costs when selling, seller finacing fees, real estate fees, etc... thats -$25k from your $80k which leaves you at profit $55k
so you're saying you're a glass half-empty guy :)
Bro
You were all over the place . Too many what ifs. Stay on track